RIM is going down beyond my initial target. Looking at it on a log-scale it is still possible that the pattern is correct but that notion would have to be abandoned if this continues another day. What is unclear is what the count would be if the “wedge’ does not work. A series of 1-2s from the initial $90 level is a possibility but that would be extremely bearish and , at this time at least, improbable.
Not that it means much but the RSI is at the lowest level in 3 years!
If you use a sharp pencil , you could say that today’s low is right in the trend-line. More often than not it does not even get there. The stock could still drop to the $22 level but regardless where you buy it, it should have a rebound to the $30 level.
RIM has dropped slightly below the trend-line. Things have never been so dark so from a contrarian view it must be a buy.
Ford also had one of these diagonals. It too exceeded the trend-line briefly. Now it is in the correction of the first bull leg. As mentioned earlier this correction can be very deep and should look like and a-b-c. $11 is where c=a, $10 is the low point in the triangle on the way up and a 60% correction would take the stock to just under $8. Where it will, in fact stop, time will tell but on average a buy at $10 will probable be profitable.
Last I looked RIM traded at around $29.83 in US$ after hours. The exchange rate is presently pretty close to par so applying that we should be right on the line. That should be a buy for at least a decent bounce of 25+%.
These two charts are unrelated, the top one is that of the Nikkei 225 , an index , covering a period of 30 years or so. The bottom one is that of RIM, a single tech. stock, that , by the way, is reporting tonight.
I used to have an investment advisor sitting right next to me at WG. JP were his initial and he is now a frequent speaker on BNN. I would put two identical charts under his nose and ask if he could see the correlation. More often than not he couldn’t. From that I learned to understand that everything is truly in the eye of the beholder.
To get to the point, I think RIM may or may not drop another dollar or two but the next big move probable is up and quite a bit. The Nikkei has not completed the “diagonal” ( read wedge) yet and should soon drop. In the end both charts will look almost identical, unless you are JP.
Correlation , incidentally, does not, of course, imply any causal relationship! The common factor here is sentiment that has moved from euphoria to grinding despair.